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Breakingviews: JPMorgan's forex smackdown

Reynolds Holding and Antony Currie discuss how the bank seems to have enough reserves, for now, to cover currency market litigation – and how that makes Citi's last-minute boost look lame.

TRANSCRIPT +

Moral legal headaches for JPMorgan the bank reporting yesterday that US prosecutors are looking at its foreign exchange business. Not a huge surprise but Antonin this story is really more about Citigroup and the legal reserves and the extra cost. From get up lawyers have to get apps and apps and it and yet certain that a headline news that city saying that its atomic justices look at us. Yeah we Conning you that was coming a lot of other filings bridal similar prior to us as a multi nation trans Atlantic. Mac Skype on it most the big banks being attacked whether it's the top six in the UK or even want to. And we've seen over the European banks McClatchy explicitly say which said he and aside tax amount. This full foreign exchange litigation and these are big numbers one point three billion dollars in what JPMorgan saying is that it won't what's he been there is. It's a site if this and that app approved the total cost we may have to spend on legal costs if everything goes against Islam brought everything we got. Are exchanged libel everything else could now be five point nine billion that's a bubble we set aside it could be zero. But this idea it's it's got up and it's going up. Why because they got a bit more clarity but I also set aside one point one trillion. In the senate courts have already been made now thanks to three weeks ago you know the problem with sixty yen is that they had to cut last week. And say we adding next 600 million to reserves and on top of that almost an and we put us and we announced without running to suck so what do we think happened. I thought well coming in to that city say that we have regulated is coming in and beat him basically give us a bit of Austria. But it seems just clicking when every other bank has done nothing and you can look at Europeans say well they came a week teammates at them they're less than does American banks. You don't banks to make that chicken will when he sees no increase in nine cool clean them. I'm what seems to implies the city group. May well be playing catch up so yes they probably had discussions of regulators. But no other banks are talking not regulators giving them a stand on mountains and saying they could obviously it was stiff again. Doesn't have the best earnings is for telling Negron is solidly in the mid single digits which is not a very good cars get if if they have boats that extra 600 million and when they announce results in the middle of a statement. Then they would have missed. Consensus estimates by quite a way. That its own act he would have gone down by about one of the one hop percentage points which of them is a huge amount when you know and in 6% to Ari. So I'm not saying that seeger was massaging it's that he's not so I think what they're doing seeking a K we didn't think he's going to be that fast. Say his what was that is how I missed it overlooks this is an. Accounting rules to take we we set aside what we think we know. Russ Pam Wright but I think it may be they seem to be on the banks have been paying at setting aside. They still. McKay we do need that more sideways or talk to just fizzled someone else is giving us telling us noting negotiating with you say you know we don't put words. I put these that facing cities we've been brought to you. Conservative but what is setting aside compared to what this whole fight inflation we've seen the past couple of years. Is has to take to my basement about is a very tricky thing because as you well night. Deciding how much you make it finds and during from four X to lateral to multitude of roles of rays doesn't crapshoot yachts and it's it is a judgment call. Well that's interesting will be following that story as wells others in the meantime stay tuned for more breaking news tomorrow.

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